shake-up over the past five years. But the company is hoping its customers may never see the inner workings in the service they're getting.

They will just expect service, and get it.

"Our technology will never be visible,'' BCB general manager Peter Roberts said in an interview. "We are not looking to emulate the big service providers. We use technology to improve the quality of what we do, to release staff capability into providing personal service, and to reduce the cost base.

I suggest that may be the exact reverse in terms of priorities in the introduction of technology into the more typical and larger North American and European banks.'' A recently-announced alliance with State Street Bank and Trust Co. and a strengthening of the links with Merrill Lynch Asset Management are part of the bank's strategy of reducing risks while offering clients a full range of custodial services.

The bank has been able to leverage its local expertise to tie in with the overseas companies' international experience. It's the alliances which give the bank the muscle it would ordinarily not have been able to achieve efficiently alone.

The State Street link is expected to develop further over the next few years.

The two banks decided to start off by developing global custody services.

BCB customers will have access to State Street's integrated worldwide custody system. BCB, meanwhile, will provide the marketing, the understanding of the local market and the expertise of developing the products to fit the needs of clients.

The same focus runs through the relationship with Merrill Lynch. The link began over the last two years, and has now developed to a more expanded range of services. BCB will provide direct distribution of 38 of Merrill Lynch's offshore funds, and offer clients access to separate account management.

With the expansion in reach and services, Mr. Roberts expects the investment in technology will begin to increase the bank's attractiveness to corporate clients.

"This will be a year in which a significant tranch of back office improvements will begin to start paying dividends,'' he said.

He expects the pay-off will come from reducing costs and the freeing up of staff to provide more personalised service. Over the next few months the bank's technology systems will be Year 2000 compliant. By the end of year the complete back office integration programme will be complete.

The bank markets itself as a niche player, catering mainly to locally-based international business.

Its customers include companies in the insurance industry, the mutual funds industry, and other corporations established in Bermuda. BCB also has a trust company catering to high net worth individuals, many who are based in North America.

Last year the bank cut its last ties to the local retail market by announcing it was discontinuing selling mortgages through wholly-owned subsidiary Somers Mortgage and Finance Ltd. No new loans are being made although the bank is still taking deposit money.

The bank is therefore more dependent on the Bermuda marketplace for its profits than are the Bank of Bermuda, and the Bank of N.T. Butterfield and Son Ltd.

"Our policy has remained consistenly unchanged since 1992,'' Mr. Roberts said. "The major plank of the policy is the focus we have on the Bermuda marketplace, which I think is one of the distinctions between ourselves and other banks and financial institutions here. We see ourselves as service provider primarily to the Bermuda marketplace. We see ourselves as being extremely risk adverse. We see our future at the bank which continues to listen to the market, what it needs and to provide competitive products to the local market.'' As a result of this niche marketing and cost cutting Mr. Roberts said the bank's growth is continuing from the previous financial year. The bank's cost ratio of expenses to revenue has come down every year since 1993, he said.

In the financial year ended September 30, 1997 the bank had a 34 percent increase in profits to $2.93 million. Customer deposits increased 57 percent to $584 million, a sign of confidence in Bermuda's smallest bank.

"The very positive trends which we were happy to report at the end of our last financial year are continuing through the beginning of this year and we look forward to hopefully presenting a consistent message,'' he said. "Our perception of our niche is the provision of at the highest level of service of the day-to-day needs of local business commmunity, which by definition is less well serviced by electronic interfaces and the occasional personal contact.'' He believes BCB will be able to maintain the pace as overseas banks step up their efforts at competing in all areas.

"We are a small bank and we will never attract business on the strength of our balance sheet, he said. "It behoves us to not delude ourselves in any way. What we have is our demonstrable aversion to risk, which is quite well documented in our annual report and in our ratings -- which is an essential counterpoint to being small. What we have in relation to overseas banks is accessiblity, personal relationships, flexibility and responsiveness. These are the cards we have to play and they're the strengths we are playing to.''